It took a lot of waiting with tense moments in European trade but markets finally went for major risk aversion across the board as US equity indices opened sharply lower following the trends in Asia and Europe. At this point note that with new two week lows being seen in EURUSD, GBPUSD, AUDUSD and their Yen crosses we are opening the possibility for retesting the recent lows in the daily’s from October though we are going to need sustained weakness in the equities through out the week if we are to see such levels. Basing on the latest talk out of the markets such would certainly be highly probable as companies report poor performance, forgoes issuing guidance if not shutdown whole units outright in an effort to save on costs and stay alive.

by Johan Kriek (jkriek@fxinstructor.com)

Key Notes:

- China Stimulus package short lived as GM falters

- Possible continuation of the risk aversion we’ve seen in the Asian markets

Probability Studies:

No Trade Zone, bearish probability. The bearish probability took effect as soon as price violated the bullish 60minute trend to the downside at roundabout 1.2740

Should the low at 1.2675 be taken out and confirmed we will have a nice bearish trading condition. Bombs away!

*watch the ZEW survey at 10AM GMT today..

Although the 1 hour stochastic has crossed bullish the cross is not confirmed yet. Should the stoch stay in this “state” then the next 1 hour candle will confirm this for me and present bullish trading opportunities

The bearish probability on the GBP is prevailing and a bearish cross on the 1 hour stoch will present me with a bearish trading condition as well

The JPY clearly bounced on the bearish current trend resistance line (blue line) but the intermediate bullish 60minute trend must be violated first before we will have a fully fledged bearish trading condition once again. This intermediate trend is indicated with the dashed lines and expect support at 97.50

If you have any questions please contact me in the Live Trading Room or just pop in to say “howzit”

Enjoy your piphunting today!

Johan Kriek

After a sharp drop at the open Asian equity indices are beginning to ease off their lows allowing the majors to see their own technical rebound after the kneejerk drop. At this point note hourly buys have been triggered across the board suggesting a deeper move looking for the current bounce with most Fib retracements necessarily redrawn. Note too higher time frames are starting to pickup suggesting a near term floor has been reached with the October lows though further equity volatility could see us retesting these levels. Ahead we may be looking at another illiquid trading day exacerbating technical breakouts as US markets will be closed for Veterans Day and the Canadian observe Remembrance Day.

Tue, 11th of November, 2008
By Setyo Wibowo (analyst@fxinstructor.com)

EURUSD Outlook
The EURUSD attempted to push higher yesterday. the pair topped at 1.2926, but further upside scenario was rejected as the pair whipsawed to the downside, hit the bottom at 1.2718 and closed at 1.2750.
This fact should keep the bearish scenario intact. My model goes mixed with downside bias. Early today in Asian session the pair continued to push lower, traded around 1.2700 at the time I wrote this comment. The pair also seemed to make a breakout to the downside of triangle formation on 4h chart, which should support the bearish view. Immediate support is seen at 1.2666. A break to the downside from that support level should trigger further bearish momentum towards 1.2500 area. Initial resistance at 1.2790 followed by 1.2850. CCI just cross -100 line down on hourly chart and about to cross -100 line on 4h chart suggesting a potential downside pressures.

EURUSD Daily Supports and Resistances:

* S1= 1.2670
* S2= 1.2590
* S3= 1.2462
* R1= 1.2878
* R2= 1.3006
* R3= 1.3086

GBPUSD Outlook
The GBPUSD continued it’s bearish scenario yesterday. The pair bottomed at 1.5573 and closed at 1.5625. The bias should stay bearish. Immediate resistance is seen at 1.5670. Initial support at 1.5550. A break to the downside from that support should trigger further bearish momentum towards 1.5400 area. CCI just cross -100 line down on 4h chart suggesting a potential downside pressures.

GBPUSD Daily Supports and Resistances:

* S1= 1.5504
* S2= 1.5383
* S3= 1.5194
* R1= 1.5814
* R2= 1.6003
* R3= 1.6124

USDJPY Outlook
The USDJPY failed to continued it’s bullish momentum yesterday. The pair attempted to push higher, topped at 99.48 but further upside movement was rejected as the pair whipsawed to the downside bottomed at  97.60 and closed at 98.00. This fact forrce my model to mixed with neutral bias. Immediate support is seen at 97.30 followed by 96.60. Initial resistance at 98.70. CCI in neutral area on daily chart.

USDJPY Daily Supports and Resistances:

* S1= 97.24
* S2= 96.48
* S3= 95.36
* R1= 99.12
* R2= 100.24
* R3= 101.00

USDCHF Outlook
After made indecisive movement on Friday, the USDCHF was traded higher yesterday. The pair topped at 1.1801 and closed at 1.1783. Early today in Asian session thye pair continued to push higher, traded around 1.1820 at the time I wrote this comment. My model is mixed with upside bias. Immediate support is seen at 1.1770 followed by 1.1710. Initial resistance at 1.1900. However CCI already in overbought area in all 3 time frames (hourly, 4h, daily) so watch out for a minor downside corrections.

USDCHF Daily Supports and Resistances:

* S1= 1.1729
* S2= 1.1675
* S3= 1.1639
* R1= 1.1819
* R2= 1.1855
* R3= 1.1909

Have a great day!

A day of bankruptcies, record losses, and zero value stock forecasts saw US equity indices taking a nose dive two hours into the US trading day forcing currencies to give up earlier rallies following a strong showing at the open in Asia. Among the headlines was Circuit City filling for Chapter 11 just a week after announcing it was closing 20% of its stores, Fannie Mae for its part reported new record losses at $29 billion for the third quarter, while Deutsche bank forecasted zero value for General Motors shares all of which helped turn investor sentiment. So what is there for currencies to look for now? From a broader view yesterdays sell-off has forced intraday charts into oversold levels suggesting a technical pullback could be in the offing in Asia, still with markets once again turning risk averse we should be looking at selling rallies. A good idea would be to draw some fibs on intraday charts from yesterdays sell-off with aggressive entries around the 23.6 Fib areas though with oscillators just rising off oversold levels a more prudent 61.8 Fib retracement should be considered as our entry point for rejoining the short side of the market.

Earlier optimism from Asia and Europe saw US equity indices starting out firm at the outset but reports of a second bailout for AIG at $40 billion and more record losses for Fannie Mae is seeing gains being unwound and with this taking currency markets down once again. At this point note it appears that the wide ranging Symmetric triangle in EURUSD charts is getting resolved with a downside breakout a daily close below the support line paving the way for a retest of the 1.2650 and 1.2527 lows. For Cable eyes are once again turned to the 1.5531 floors, though an even bigger story is the Yen pairs as we retreat even in USDJPY as well underscoring just how risk averse the market is, the objective on this one 96.84 the 38.2 Fib retracement level from the lows of October 24.

European markets took its cues from Asia where Equity indices ended up with another strong performance following reports of more stimulus packages over the weekend. With this earlier attempts to pullback to the close on Friday are being reversed with Cable now back where we started as of writing. From the Calendar today’s key numbers will be coming out of the UK and Canada where consensus forecasts for the former’s PPI Input figures are at -2.6% a number needed to reassure markets that the BoE was fully justified in taking the drastic 150bps cut last week. As for Canadian data consensus for Housing Starts points to a 202,000 print easing of the previous 217,000 but this should be of no concern given the upside surprises in the previous read. For now equity market correlations remain the main barometer for the currencies with broad gains meaning a weaker greenback and yen.

Mon, 10th of November, 2008
By Setyo Wibowo (analyst@fxinstructor.com)

EURUSD Outlook
After a limited bullish momentum on Friday, the EURUSD was traded higher early today in Asian session, traded around 1.2860 at the time I wrote this comment. We had about 100 pips gap. From a longer term of view, as long as the pair stay below 1.3200, technically the bias is still bearish. My model is mixed with neutral bias. Immediate resistance is seen at 1.2930 followed by 1.3050. Initial support at 1.2783 followed by 1.2666. CCI in neutral area both on 4h and daily chart.

EURUSD Daily Supports and Resistances:

• S1= 1.2628
• S2= 1.2541
• S3= 1.2430
• R1= 1.2826
• R2= 1.2937
• R3= 1.3024

GBPUSD Outlook
Similar to EURUSD, the GBPUSD also traded higher this morning in Asian session and we also had more than 100 pips gap. However, from a longer perspective, as long as the pair stay below 1.6408, I think we are still in bearish scenario. My model goes mixed with neutral bias. Immediate resistance is seen at 1.5940 followed by 1.6050. Initial support at 1.5725 followed by 1.5590. CCI in neutral area on daily chart.

GBPUSD Daily Supports and Resistances:

• S1= 1.5492
• S2= 1.5342
• S3= 1.5150
• R1= 1.5834
• R2= 1.6026
• R3= 1.6176

USDJPY Outlook
The USDJPY failed to continued it’s bearish momentum on Friday. The pair topped at 98.68 and closed at 98.23. The bearish channel both on hourly and 4h chart is violated to the upside. This fact force my model to mixed with upside bias. Immediate support is seen at 98.50. Initial resistance at 99.50. CCI heading up towards 100 line on 4h chart suggesting a potential upside pressures.

USDJPY Daily Supports and Resistances:

• S1= 96.94
• S2= 95.66
• S3= 94.79
• R1= 99.09
• R2= 99.96
• R3= 101.24

USDCHF Outlook
The USDCHF made indecisive movement on Friday by opened and closed at almost the same price (1.1789 and 1.1784) However early today in Asian session the pair was traded lower around 1.1740 at the time I wrote this comment. My model is mixed with neutral bias. Immediate resistance is seen at 1.1800. Initial support at 1.1680 followed by 1.1590. CCI in overbought area and heading down on daily chart suggesting a potential downside pressures.

USDCHF Daily Supports and Resistances:

• S1= 1.1709
• S2= 1.1635
• S3= 1.1592
• R1= 1.1826
• R2= 1.1869
• R3= 1.1943

Have a great day!

Markets continue to ignore weakness seen out of the US employment situation report which painted a very bleak outlook for the economy in the months ahead. With the strong close in US equities Friday we opened the week with some upside gaps going against the Greenback and Yen. So the question now is will this be an exhaustive gap or continuation, as of writing we seem to be retreating from that gapping open for what could likely be a classic pullback to Friday’s closing levels, from there we would have to look at equity market performance once again. On this note that investors are hearing good news with a new stimulus package being crafted in the US, a $586 billion plan of its own from China, and calls by the G-20 for more rate cuts and increased fiscal spending.

Very strange goings on in the market with US equities still up and the Yen pairs pushing north with them despite a very sharp drop in the US Non-farm Payroll figures at -240,000 against the -200,000 consensus and the previous revised to an even weaker -284,000. Just to top it all of the Unemployment Rate pushed to 6.5% well above expectations as the jobless cannot find any alternatives. So what is going on, at this point we could think of two scenarios a technical rebound following two days of sharp losses that should be susceptible for a late NY trade sell-off in equities and with that risk aversion and downside gap for the Yen pairs at the open on Monday. The other more ominous view is funds once again are active in the late European trade which suggests fundies should will likely reassert themselves at the close of European markets.